In my May 5th blog post entitled, Three Cloud Questions to Ask in Your RFP, I mentioned that close to 3,000 organizations were currently billing themselves as leading cloud solution providers (CSPs). Two months later, we’re seeing some seismic shifts in the cloud computing industry. Companies who were recognized as industry leaders a year ago have now been relegated to “niche player” status. Other companies have announced so many price reductions that their customers are starting to wonder if they were overpaying for their cloud solutions in the first place.
If you’re experiencing any of the three scenarios listed below, now is an excellent time to determine whether your cloud hosting provider is stable or facing a cloudy future.
Is Your CSP Losing its Luster?
Leading IT research firm Gartner recently released its much-watched Magic Quadrant 2014 for cloud computing. While some CSPs such as HOSTING continue to be viewed favorably, other CSPs, such as Rackspace, saw their status slip. Last year, Rackspace was touted as an industry leader. This year, Gartner determined that they were a niche player. Major management changes, a fluctuating stock price and swirling rumors about whether the company plans to take itself private or position itself for acquisition continue to plague them.
A change in status or visibility in the marketplace can signify that a cloud solution provider is experiencing some internal turmoil as well. Before deciding to commit to them or even stay with them, find out the reasons behind their status change. A shift in management or strategic direction could be the cause.
Is Your Cloud Provider on a Buying Spree?
In the highly competitive cloud computing space, companies are scrambling to scale their operations and offerings – often acquiring multiple companies in order to do so. While organizations such as Rackspace have acquired a number of cloud companies, Gartner has cautioned that they have yet to integrate these acquisitions into a cohesive entity.
If your CSP is snapping up companies, find out how they’re integrating them and what their timeframe is for completion. Learn how they plan to enhance, streamline or replace their solutions and services – and how this will impact your current relationship with them.
Is Your CSP Turning into a Discount Store?
While some CSPs are competing on size, others are competing on price. For example, since Amazon launched its public cloud service in 2006 it has lowered the cost of using the platform 30 times. But do these multiple price reductions matter to customers at this point? According to Kyle Hilgendorf, research director in Gartner’s service for technology professionals, not really.
“Prices are getting to the point at which they’re so low that these small repeated drops don’t make an impact on buying decisions so much,” Hilgendorf notes. “When I talk to customers they say ‘Price is important but we’re willing to pay a little bit more if we can achieve the scalability or elasticity, or the provider has a bunch of features that nobody else in the market offers.’”
While everyone loves a deal, be cautious if your CSP is continuously rolling out price reductions. It could mean that they are struggling to generate additional revenue, or need to shore up their customer base. Price reductions could also signal a reduction in their service offerings, leaving you to take a more active role in managing your cloud environment.
The cloud computing industry is evolving, however, one thing remains constant – your need for a stable, secure cloud hosting expert to manage your business-critical data and assets. Have questions about CSPs? HOSTING has answers. Contact us to learn more about our cloud and managed services.